Budgeting for ACA Compliance: Tips for CFOs

As a Chief Financial Officer (CFO), staying on top of your organization’s compliance with the Affordable Care Act (ACA) is not only critical to avoid penalties but also to ensure your organization is managing healthcare costs efficiently. While ACA compliance might seem complex, proper budgeting for ACA compliance can help streamline processes, reduce costs, and ensure your organization avoids hefty fines. In this blog post, we’ll dive into budgeting strategies and provide tips for CFOs on how to manage ACA compliance with confidence.

Understanding ACA Compliance and Its Importance

Before diving into budgeting for ACA compliance, it’s important to understand what ACA compliance entails. ACA compliance involves ensuring that your organization offers affordable healthcare coverage to full-time employees and meets IRS reporting requirements. Under the ACA, Applicable Large Employers (ALEs), defined as businesses with 50 or more full-time employees, must either provide affordable health insurance or potentially face penalties.

Key ACA requirements include:

• Offering Affordable Health Coverage: Health coverage must meet minimum value standards and be affordable to full-time employees.

• Reporting Requirements: ALEs must file annual reports with the IRS (Forms 1094-C and 1095-C) and provide these forms to employees.

• Tracking Employee Hours: It’s necessary to track part-time and variable-hour employees to ensure they meet the full-time threshold of 30 hours per week or 130 hours per month.

ACA compliance is an ongoing responsibility that involves data collection, monitoring employee eligibility, and filing accurate reports to the IRS. Failure to comply with these requirements can result in substantial fines, making it crucial for CFOs to allocate resources efficiently for ACA compliance.

Key Areas for Budgeting ACA Compliance

Budgeting for ACA compliance requires a thoughtful approach to various activities, ranging from tracking employee hours to reporting. Below are key areas where CFOs should allocate resources:

1. Tracking Employee Hours

Tracking hours worked by employees, especially part-time and variable-hour employees, is one of the most crucial aspects of ACA compliance. Failure to track these hours accurately could lead to noncompliance and subsequent penalties. CFOs should budget for systems or services that help manage and track hours effectively.

Solution: ACA-Track provides a robust platform that tracks employee hours worked across multiple systems such as payroll, timekeeping, and mobile devices. This system ensures that all employee types (e.g., full-time, part-time, variable-hour, substitute) are accurately tracked. ACA-Track integrates with HRIS and payroll systems to simplify data collection and reporting.

Budget Tip: Invest in an integrated platform like ACA-Track to automate hour tracking. This investment will save time, reduce manual errors, and help prevent costly penalties due to incorrect reporting.

2. Variable Hour Employee Tracking

CFOs should be especially mindful of variable hour employees, as these individuals often present challenges when determining ACA eligibility. Proper tracking of hours is necessary to ensure that these employees are categorized correctly as full-time or part-time under ACA rules.

Solution: ACA-Track offers Variable Hour Tracking, which allows employers to track the eligibility of employees based on their hours worked over time. This feature is essential for tracking the eligibility of employees who may not have fixed work schedules.

Budget Tip: Allocate resources for software that can manage variable-hour employee data. Accurate tracking reduces the risk of compliance issues and ensures that full-time employees are offered insurance benefits when required.

3. Compliance Reporting: 1094-C and 1095-C Forms

Filing the required ACA reports, specifically Forms 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) and 1095-C (Employer-Provided Health Insurance Offer and Coverage), is another critical component of ACA compliance. These forms must be submitted to the IRS and provided to employees by specified deadlines.

Solution: ACA-Track simplifies the reporting process by generating IRS-compliant 1095-C forms for employees and 1094-C transmittals for submission to the IRS. Additionally, ACA-Track ensures that all employee ACA data is stored in a centralized location for easy retrieval during IRS audits.

Budget Tip: Consider the costs of outsourcing reporting or investing in a software solution like ACA-Track that streamlines the reporting process. This will reduce the administrative burden, ensuring compliance while avoiding penalties for late or incorrect filings.

4. Filing and Submitting Reports to the IRS

For employers with more than 250 employees, the ACA mandates electronic filing of 1094-C and 1095-C forms. The IRS assigns a Transmitter Control Code (TCC) to employers who file electronically, which requires an application and validation process.

Solution: ACA-Track not only generates the necessary reports but also facilitates the electronic filing process by allowing you to submit an XML file directly to the IRS. This integration ensures your data is in the correct format and complies with IRS guidelines.

Budget Tip: When budgeting for ACA compliance, account for the time and resources required for obtaining a TCC and submitting electronic reports. Investing in software like ACA-Track can reduce the time spent on the filing process and ensure you meet IRS deadlines.

5. Correcting ACA Reporting Errors

Mistakes in ACA reporting can result in penalties, making it essential to quickly address any errors that occur. Having a system in place for identifying and correcting reporting errors is crucial to avoid costly fines.

Solution: ACA-Track includes features that identify discrepancies in ACA data and allows for corrections before reports are submitted to the IRS. The system also provides detailed audit trails for easy tracking of any errors or changes.

Budget Tip: Allocate resources for a dedicated ACA compliance advisor or customer support service to assist in resolving errors promptly. ACA-Track’s Client Success Advisors can help guide your team through the correction process and ensure your reports are accurate.

6. Training and Education

ACA compliance is a complex and evolving field. CFOs should budget for ongoing training to ensure their team stays informed about changes in ACA regulations and best practices for compliance.

Solution: ACA-Track provides educational resources and access to support teams that can help guide your staff through the intricacies of ACA compliance.

Budget Tip: Set aside funds for training programs that keep your HR, payroll, and benefits teams up to date with the latest ACA regulations. The investment in education will pay off by ensuring long-term compliance and reducing the risk of penalties.

Benefits of Using ACA-Track for Compliance

Incorporating an ACA compliance solution like ACA-Track into your budgeting strategy offers several key benefits:

• Simplified Tracking: ACA-Track automates the tracking of employee hours, including variable-hour employees, which reduces manual work and errors.

• Comprehensive Reporting: ACA-Track generates and submits IRS-compliant 1094-C and 1095-C forms, ensuring timely and accurate reporting.

• Error Management: The software helps identify and correct ACA reporting errors, reducing the risk of penalties.

• Security: ACA-Track’s cloud-based platform is secure, with encrypted personal identifying data, ensuring that your employee information is protected.

Conclusion: Budgeting Smart for ACA Compliance

For CFOs, budgeting for ACA compliance is not just about allocating resources for tracking and reporting; it’s about investing in tools and processes that streamline compliance while reducing the risk of penalties. By leveraging ACA-Track’s solutions, you can manage ACA compliance with confidence, avoid costly mistakes, and ensure that your organization remains compliant year after year.

Start planning your ACA compliance budget today, and let ACA-Track handle the complexity so you can focus on the bigger financial picture.